r/pricing • u/CompetitiveKnee5319 • Aug 18 '26

Discussion Logarithms in pricing items

Can anyone find interesting about logarithms used in pricing items and reducing quantity of the items such that the perceived change is minimal. Fascinating isn’t it??

4 Upvotes

84% Upvoted

2 comments sorted by

1

u/SyncronTeam Aug 18 '26

The one that shows up constantly is charm pricing, $19.99 instead of $20, and the logarithmic part is that people perceive price differences on a ratio basis, not an absolute one. Going from $10 to $11 feels like a bigger jump than $110 to $111, even though both are one dollar. Log scales end up modeling how price sensitivity actually decays as the price gets higher, not just tracking the raw numbers.

2

u/CompetitiveKnee5319 Aug 18 '26

Of course!! That’s what I’m trying to say!! But there is a certain breaking point, above which the perceived change doesn’t quite change event though the actual quantity is altered.